One thing people must understand when it comes to managing their finances is to understand the basics of wise spending. Not only it is important to handle your finances wisely, it will also prevent you from the stress of late bills, poor credit, and preparations for unexpected expenses.
To make the best out of your finances and take control of your financial freedom, we’ve come up with four ways you can manage your account.
Here are 3 ways you can take control of your finances.
Determine Where You Spend Your Money
Before you start getting excited about your pay, it is important to take control of where you spend and how you spend it. You will need to keep track of your income and monthly expenses to determine just how much you need to save every month. Do you have loans to pay? Is your monthly rent covered? Be sure aware of where your money actually goes before you end up spending more than you should.
Make A List of Financial Goals – both short term and long term
Once you have determined where your money goes and how much you need to save for bills decide on your financial goals in the short term and long term. Do you have goals of going on a trip or making a down payment on your first house? Maybe you have a long-term goal is retiring early and traveling the world. Whatever financial goals you might have, make a list and determine how you will be able to afford it.
Build a Guide Plan For Your Goals
Now that you know your budget and your list of goals, take the next step to determine your spending based on your priorities. One major rule in finance is the 50/20/30 rule. This rule consists of 50% of your pay goes to your essentials that include rent, utilities, transportation, food, and medical. The 20% goes to debt reduction and savings. The last 30% goes to flexible spending such as phones, cable, purchases, etc.
With these four ways of proper management, you can prepare yourself for the unexpected and lead your path to financial freedom. Be sure to create your plan and take control.